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HB 77

Relating to the repeal of or limitations on certain state and local taxes, including school district maintenance and operations ad valorem taxes, the enactment of state and local value added taxes, and related school finance reform; imposing taxes.

89th Legislature, 2nd Called Session (2025) Introduced by Ben Bumgarner and 7 co-sponsors

Texas bill replacing school property taxes with value-added taxes while restructuring K-12 education finance, shifting tax burden from property owners to consumers.

Referred to Ways & Means
#comptrollerofpublicaccounts(v2608) #education #commissionerof(v9954) #education--primary&secondary--finance(i0250) #foundationschoolprogram(s0541) #legislature(i0520) #taxation--property-taxrate(i0794) #taxation--sales(i0800) #taxation--schooldistrict(i0785)
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Bill Summary · HB 77

Legislative bill overview

HB 77 proposes a comprehensive Texas tax restructuring that would eliminate or cap school district property taxes (ad valorem taxes) while replacing lost revenue through new state and local value-added taxes (VAT). The bill couples tax relief for property owners with broader school finance reform and represents a fundamental shift in how Texas funds education.

Why is this important

Property tax reform directly affects homeowners, businesses, and school funding stability—three of Texas's most contentious fiscal issues. The shift from property taxes to consumption-based taxes would redistribute the tax burden across different economic groups and potentially impact cost-of-living for all consumers, while school finance changes could significantly affect education equity across wealthy and poor districts.

Potential points of contention

  • Tax incidence shift: Moving from property taxes to VAT shifts burden from real estate holders to consumers; lower-income households typically spend larger portions of income on consumption and may pay proportionally more
  • School finance equity: How revenue replacement maintains funding for under-resourced districts versus affluent ones; whether VAT generates sufficient, stable revenue compared to existing property tax collections
  • Implementation complexity: VAT administration is more complex than existing systems; states without VAT may face federal complications; transition period risks to school budgets during changeover
  • Political ideology: Represents competing visions on taxation philosophy (property rights vs. consumption taxation) and state vs. local control of education funding

Compiled from official sources — confirm details with the bill’s official record.

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